What is the difference between growth plan and dividend plan?

Let me answer your query with the help of an example-

Suppose a person, Mr. A invests Rs. 1000 in a mutual fund. After three months, the corpus becomes 1500. Now the investor has two options-

1. He can withdraw the profit generated by the mutual funds, this is termed as Dividend Plan. In this case, the investor can ask for regular payments from the AMC. He can ask for payment monthly, quarterly, half yearly or yearly.
2. If the investors’ accumulated corpus is invested back in the mutual fund market, then it is termed as Growth Plan. This plan works on the process of compounding.

Thus, according to your needs choose your mutual fund plan wisely for a happy investment journey.

Broadly, there are two categories of mutual fund plan- one is Growth Plan and the other is Dividend Plan. In case of growth plan, the profit generated on the investment is re-invested into the mutual fund. Talking about the dividend plan, the profit generated is not re-invested and given to the investor according to the desired time. However, the amount of dividend is not fixed and it depends on the market conditions.

Which is better, growth or dividend?

According to my opinion, growth plan is a better option as you can enjoy the power of compounding by investing your money again and again.

Who Should Invest?

Growth plan is suitable for the investors who want to generate large corpus over long period of time. Also, the individuals having regular income flow can drop the idea of investing in growth plan. Dividend plans are suitable for the investors who are in search of regular income through mutual fund market.

I hope that you got the answer to your question.